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HMRC internal manual

Capital Gains Manual

Death of person with interest in possession: recovery of held-over gain

TCGA92/S67 (4), TCGA92/S74

Where an interest in possession in settled property is terminated by the death of the beneficiary (or the person entitled to such an interest dies although the interest does not then terminate) and the disposal of the assets comprising that settled property to the trustees had been the subject of a claim to gifts hold-over relief, see CG66880+, then the exemption from charge on the trustees under Sections 72(1)(b) or 73(1)(a) is withdrawn, but only to the extent of the held-over gain (or a part of it corresponding to the assets deemed to be disposed of on the death of the beneficiary).

Where a person with an interest in possession dies, and section 72 or section 73 applies, a check should be made to discover whether any of the relevant assets were the subject of an earlier gifts hold-over claim.

There are examples in CG36512 and CG36513.